Steinhoff ex-CEO's Ally Joins Roll Call of Corporate Pariahs
(Bloomberg) -- After three decades behind the scenes, Stehan Grobler is now in the spotlight.
Having met former Steinhoff International Holdings NV Chief Executive Officer Markus Jooste three decades ago, 59-year-old Grobler went on to serve as a long-standing executive while the retailer expanded across the world. But when an accounting scandal erupted at the South African company in December, the lawyer was left exposed.
Last week, Grobler became one of just three people to have been publicly sanctioned by Steinhoff for their role in the crisis, which has left the company’s finances in tatters and wiped out billions of dollars of market value. While Jooste quit immediately and is being investigated by police at the behest of the company, Grobler and former Chief Financial Officer Ben La Grange were suspended eight months later as part of an ongoing investigation by auditors at PwC.
Grobler declined to comment on his work for Steinhoff when contacted by phone and email, citing confidentiality agreements. What the owner of Mattress Firm in the U.S. and Conforama in France thinks he did wrong is not yet clear, and may be detailed in PwC’s final report, due by year end.
What is known is that the executive was involved with the company for more than 20 years as company secretary, head of legal and director of treasury and financing. He resigned in February, but remained on the pay roll in a consultancy position.
“With his closeness to the company he should have known something was wrong and he had the fiduciary responsibility to make sure that things are above board,” Asief Mohamed, chief investment officer at Cape Town-based Aeon Investment Management, said by phone. “The whole management team had these responsibilities and if they didn’t know that something was going on, then it means at the least they were incompetent.”
Grobler’s road to Steinhoff was inauspicious. According to details he confirmed by email, the lawyer went to an Afrikaans-speaking school in Lichtenburg, a small town in the corn-growing region of South Africa’s North West province. He then attended what’s now known as the University of Johannesburg, receiving degrees in commerce, economics and law. He trained with Pretoria-based attorney firm Dyason Inc. and was admitted as a lawyer of the High Court of South Africa in 1989.
It was while he was at Dyason that Grobler met Jooste, who was running furniture manufacturing company Gommagomma Holdings (Pty) Ltd in the North West. Having struck up a business relationship, Grobler worked on the merger of Steinhoff’s European operations with Gommagomma and other entities, leading to Steinhoff’s initial public offering on Johannesburg’s stock exchange in 1998.
A year later, Grobler was named Steinhoff’s company secretary. Under South African law the holder of that position has duties that include giving directors guidance about their responsibilities, reporting any lack of compliance with the business’s rules and certifying financial statements. By 2000, Grobler was also appointed Steinhoff’s compliance officer and headed up the retailer’s legal department, according to annual reports.
He’s unlikely to be the last of the suspensions. Jooste had a group of friends working with him at Steinhoff, many of whom he met in the late 1970s while attending the University of Stellenbosch. They sat on multiple boards together and did numerous interrelated deals. Their loyalties now face the ultimate test.
“I expect further action against people who either should not be there because they were incompetent, failed their fiduciary duties or were involved in some way,” Mohamed said.
Steinhoff wasn’t Grobler’s only appointment. He was the company secretary for Malenge Sawmills (Pty) Ltd., which eventually became Kluh Investments (Pty) Ltd. That company was involved in selling forestry assets and car dealership properties to Steinhoff at many multiples of their original value from 2001 to 2007, which coincides with the period that Grobler was acting as company secretary.
“I held many appointments including” those at the companies referred to, Grobler said in an emailed response to questions on Tuesday. “I have not worked for these companies. I work for Hoffman Attorneys and act as director for Hoffman Inc.”
Hoffman Inc. is the firm that also acted as company secretary for Capstone 556 (Pty) Ltd., an investment vehicle set up by Jooste and another former Steinhoff director Claas Daun. Capstone was involved in a series of complex trades in a smaller South African retailer that yielded a multi-million-dollar payday for companies linked to Jooste and Daun.
Grobler’s involvement went even deeper because he was also the company secretary for Braecroft Timbers Pty Ltd., which controlled Kluh until Braecroft sold all of its Kluh shares to Swiss-based Fihag Finance Handels AG, the holding company created by Steinhoff founder Bruno Steinhoff.
Grobler and the Stehan Grobler Trust have a postal address in Stellenbosch, near Cape Town, where Steinhoff is headquartered. The trust also owns a property on the same street as Jooste in Hermanus, a small seaside town in the Western Cape where the ex-CEO is living, according to the Johannesburg-based Financial Mail.
Steinhoff’s shares declined 2.4 percent in Frankfurt on Tuesday, extending losses since the scandal broke out in early December to almost 96 percent.
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